Egypt con­tin­ues rally on IMF; Saudi strong MIDEAST STOCK MAR­KETS

Egypt’s stock mar­ket gained for a 12th straight ses­sion yes­ter­day af­ter the In­ter­na­tional Mon­e­tary Fund ap­proved a $12 bil­lion loan for the country, while Saudi Ara­bia rose, buck­ing a down­trend in the rest of the Gulf. The IMF loan ap­proval had been widely ex­pected, but it added fresh fuel to a rally caused by Egypt’s de­ci­sion to float its cur­rency on Nov. 3, which has cre­ated hopes for ma­jor in­flows of for­eign money.

Egypt’s blue-chip in­dex climbed 2.1 per­cent in mas­sive vol­ume, al­though the in­dex came well off the day’s high and vol­ume fell from the record set on Thurs­day. The in­dex has surged 28.1 per­cent since the pound was floated. Fi­nan­cials and ex­porters were among Sun­day’s top gain­ers, with Egypt Kuwait Hold­ing jump­ing 4.3 per­cent and Ara­bian Food In­dus­tries ris­ing 10.7 per­cent.

A few blue chips de­clined on prof­ittak­ing, how­ever; at cur­rent ex­change rates, do­mes­tic stock prices in Egyp­tian pounds have risen close to global de­posi­tary re­ceipts ex­pressed in dol­lars.

Tele­com Egypt, for ex­am­ple, fell 2.2 per­cent to 9.85 pounds. Its GDRs, each of which rep­re­sents five shares, last closed at $2.505, equiv­a­lent to 7.89 pounds. Ex­change data once again showed net for­eign buy­ing of stocks, to the tune of about $18 mil­lion - a large amount by the stan­dards of re­cent years, though down from last week’s lev­els and not big by the stan­dards of many emerg­ing mar­kets.

“Peo­ple are buy­ing the eco­nomic growth ex­pected in the next few years ... Most of the money is trans­fers from abroad,” said Hany Ge­nena, an­a­lyst at Bel­tone Fi­nan­cial in Cairo.

Yields on Egypt’s three- and ninemonth Trea­sury bills fell yes­ter­day at a weekly auc­tion, an­other sign of fund in­flows. Bank of Amer­ica Mer­rill Lynch rec­om­mended in a report that in­vestors buy six-month T-bills with­out hedg­ing them, re­viv­ing a trade that was pop­u­lar among for­eign in­vestors be­fore po­lit­i­cal up­heaval in 2011 ush­ered in years of in­sta­bil­ity.

Zain rose 0.6 per­cent, how­ever, as in­vestors wel­comed the fact that the award was much less than the 2.2 bil­lion riyals which Mo­bily had orig­i­nally been seek­ing. Saudi bank­ing shares con­tin­ued their as­cent, with lender Saudi Hol­landi surg­ing 6.7 per­cent to 11.90 riyals - still a 24 per­cent dis­count to the mean fair value of an­a­lysts polled by Reuters.

Petro­chem­i­cal shares firmed, with the sec­tor’s in­dex gain­ing 1.1 per­cent, even though Brent crude oil tum­bled 2.4 per­cent to below $45 bar­rel on Fri­day. In re­cent months the mar­ket has be­come less closely cor­re­lated to oil first be­cause of fears of sys­temic prob­lems in the econ­omy as liq­uid­ity tight­ened, and then be­cause Riyadh’s huge in­ter­na­tional bond is­sue last month eased those fears. — Reuters